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Just in case there weren't enough risks in today's overheated, overbought, low-yielding corporate bond markets, we now welcome back an old friend: buyout risk.

Native to heady credit environments, with their abundant supply of cheap financing, buyouts tend to appear suddenly and in groups. After a long fallow period, here they are again.
H.J. Heinz
(ticker: HNZ) last week agreed to sell itself for $23 billion to Warren Buffett and Brazilian private-equity firm 3G Capital. Earlier this month,
Dell
(DELL) agreed to be taken private in a $24 billion deal.

Buyouts typically load up companies with debt to finance these transactions. Moody's last week estimated that the Dell buyout will roughly double the computer maker's debt, to $18 billion from $9 billion.

The blind-side risk to bondholders is that one day you own an investment-grade company with a modest amount of debt, and the next, you own a highly leveraged company facing a downgrade to junk status, while you get herded into a much larger pen of bondholders who will be fighting over the company's assets if it ever defaults. What makes LBO risk especially pernicious is how tough it is to predict.

"Possible targets can include companies that are particularly asset rich, that have high cash balances, and where the stock price might be lagging, and where parts of the company might be easily sold off," says Paul Matlack, fixed-income strategist at Delaware Investments. "You can focus on those components, but you can never fully avoid [LBO] risk."

On the day the Heinz news broke, prices of existing triple-B-rated Heinz bonds fell by over two cents on the dollar, while the cost to insure those bonds through credit-default swaps soared by over 25% to a new high.

On the high-yield side, LBOs create large chunks of new junk bonds that eventually become staple index components but first risk overwhelming market demand. And if an LBO goes awry, it can crush a company.

Since it was taken private for $45 billion during the last LBO boom, in 2007, Energy Future Holdings (formerly known as TXU) has become the poster child for the supersized, troubled LBO. Hamstrung by falling natural-gas and electricity prices, TXU's debt-payment needs have outstripped its earnings, and despite repeated distressed-bond exchanges, the company is still widely considered a default risk.

Estimates say the Dell LBO might entail $7.5 billion in bank loans and $3.25 billion in bonds, with the Heinz deal producing about $7 billion in debt. Citi strategists last week said these two deals alone would constitute between 25% and 30% of the total LBO paper issued across the high-yield and loan markets in the past two years.

But whenever this debt makes it to market, Citi thinks it will be well received, assuming investor demand for junk-rated bonds and bank loans remains anywhere near as insatiable as it is now.

"We remember in November 2006 the consternation before two high-profile LBOs priced," Citi analysts wrote recently. "The deals went so well that investors went from worrying that $12 billion of bonds needed to be financed to worrying that there was only $12 billion of bonds."

After several years of companies and consumers paying down debt burdens following past excesses, bond investors should keep an eye out for any reversal.

"If we do see an increase in LBOs, it's just a question of how leveraged they are," says Marianne Rossi, high-yield portfolio manager with Stone Harbor Investment Partners.

Treasuries, which remain safe from leveraged buyouts (we hope), still struggled a bit last week, with the 10-year-note yield rising to 2.014% on Friday from 1.964% a week earlier.